The message is clear: Luxembourg can no longer be content with being an administrative platform for investment funds. To mark the release of the 2025 edition of its “Investment Funds in Luxembourg” (IFL) guide, EY Luxembourg is calling on the financial centre to take the next step: to become a “strategic and technological design centre” for the global asset management industry.
“For Luxembourg to maintain its leadership, it must become not only a hub for fund operations, but also a centre of thought and innovation,” says Nicolas Bannier, chief operating officer and wealth & asset management leader at EY Luxembourg. “It is now time to build the ecosystems that will support strategy design and technology development.”
The 2025 edition of the IFL, nicknamed the “Fund Bible”, has established itself as the industry’s reference work for more than 25 years. This 600-page publication details the types of investment vehicles available in Luxembourg, their regulatory framework, recent legislative developments and the obligations on managers, custodians and other service providers.
While Luxembourg retains a dominant position -- with almost half of the €7,000 bn in cross-border assets under management at the end of 2024 -- the asset management landscape is changing. Passive strategies and ETFs continue to gobble up market share, pressure on fees is accelerating consolidation and digital investors are challenging traditional distribution channels. “Market consolidation, fuelled by margin compression, is favouring large players and pushing smaller ones to rethink their operating and distribution models,” observes EY.
At the same time, private markets are attracting more and more investors looking for diversification and yield, but posing liquidity challenges. EY identifies tokenisation as a promising solution. The transformation of fund units into digital tokens would make it possible to trade holdings on secondary markets, while dissociating the liquidity of assets from that of investors.
For EY, the transformation of the sector is not limited to technology. It involves an intellectual repositioning of Luxembourg in the value chain. The country must no longer simply house and administer funds, but also host decision-makers, product designers and strategy architects. This shift from “operational centre” to “design centre” is at the heart of the IFL 2025 message.
The publication comes against a rapidly changing regulatory backdrop, marked by the entry into force of Dora, the European regulation on digital resilience, the implementation of the Savings and Investments Union and the “omnibus” directive on ESG. These three pillars aim to strengthen the coherence, transparency and sustainability of the European financial system. “The regulatory framework is becoming more integrated and strategic, balancing increased retail investor participation with stronger operational safeguards,” the report points out.
EY also notes that “many companies have, for too long, layered innovation on top of legacy systems”, while today’s customers demand speed, personalisation and transparency. “Success in the years ahead will depend on the ability to build platforms capable of supporting the next generation of products,” the study warns.
The IFL 2025 also compiles technical and regulatory news: clarifications to Circular 24/856, implementation of Regulation T+1 on settlement, revision of the SFDR, Micar and Dora delegations, as well as tighter anti-money laundering rules for crypto-assets. All these changes reflect the desire to bring the Luxembourg financial centre into line with international standards while retaining its flexibility.
For EY, the competitiveness of the financial centre will now depend on its ability to integrate technology into its strategy. Luxembourg already has solid assets - political stability, regulatory expertise, multilingual culture and a dense ecosystem - but it needs to transform this infrastructure into a driver of innovation. As Nicolas Bannier sums up, “Luxembourg must become the place where strategies are conceived, not just where they are domiciled”.
The guide, available in English, Chinese, French and German, can be downloaded from the EY website. Behind the technical precision of this “Fund Bible” lies a vision of the future, that of a financial centre that wants to think as much as administer, and build, according to the motto of this edition, “what comes next”.
